Surcharge or No Surcharge? (Part 3 of 6)

This is so simple it’ll either make you smile or make you scream. The idea here is that you can be presented with information in a format that seems to display a greater value than what it actually does.

For example, take a look at the rate examples below. Can you tell which deal is the best? What if company “A” told you that their rates were better than company “B.” Or what if company “B” told you their rates match that of company “A”? Who would you trust?

Well, as the graphic indicates, both rate examples are identical. That’s because the Qualified, Mid, and Non-Qualified rates are inclusive of a wholesale rate. The only difference above is the manner in which each is presented.

There is nothing particularly wrong with either example assuming the merchant knows what to look for. But what if a processor tried to convince you the rates were something other than what they really are?

Let’s say that you were talking to a representative of company “A” and they wanted you to believe that the Qualified rate was actually 1.09% when we know the cost of that bucket is actually 1.5%. That conversation should trigger concern as it’s not plausible that the company is going to give you a rate for less than they pay.

But if company “A” had promoted that these were indeed surcharges in addition to the discounted rate, it wouldn’t be nearly as much of a concern.

Just be cautious and be sure to ask if the rate structure includes the Discount rate or if the rates shown are surcharges in addition to the discount rate. And if you get the feeling that the representative isn’t answering your question, consider another candidate for your merchant account.